Why Nintendo Needs to Change Course

E3 has come and gone, and we’re left with hours of trailer footage and gameplay to parse and dissect. Developers and designers showcased their upcoming slate of software and hardware, impressing fans across the world. While many gamers are predicting that 2015 will be one of the best years in gaming ever, there is one clear developer who has (yet again) underwhelmed: Nintendo.

This does not come as a surprise, really. Nintendo has been consistently moving in a different direction for years now, and it has some experts concerned for the future of the company. We’ve already covered the disappointing display of games from this year’s E3, so now it’s time to look at the company as a whole and break down why their corporate strategy needs a serious overhaul.

1) They are Riding on Goodwill

Nintendo’s strongest trait is its intellectual property, by and large. You can’t even think about video games without thinking about their iconic characters. Everyone can recognize Mario’s signature voice. “It’s dangerous to go alone…take this!” is one of the most repeated phrases in gaming culture. Heck, even the phrase “Metroidvania” is (half) rooted in Nintendo’s ingenious level design. We know and love these characters.

But Nintendo can only base their business model on our love for their characters for so long. The Mario games are becoming more and more similar with every passing game, leading people to wonder if the new game is even worth getting, since it’s so similar to the one they already own. Is Star Fox worth purchasing, since the novelty of a space-flight simulator has been replicated and improved upon? Are the games worth getting just because you love the characters within?

Answer: No.

Nintendo is capitalizing on nostalgia. That’s why every Mario Kart game has just as many “classic” levels as it has new ones. That’s why so many of their games are 2D platformers. That’s why Super Smash Bros. includes Mr. Game & Watch, R.O.B., and Pac-Man. Nintendo is doing what it has been doing for years, and it’s worked out alright for them so far, so they don’t focus on innovation in ways that many gamers desire. Powerful machines, realistic graphics, and huge, open worlds have not been staples of their games in the past, so why start now?

The misleading statistic on sales volume is rooted in why the kids are playing Nintendo games today. The reason so many children have WiiU consoles is because their parents or older siblings grew up with Donkey Kong and Yoshi, so they have a vested interest in those characters. Parents remember the great times they had with the old-school games, and bought the new Mario Party for nostalgic reasons. But Nintendo is not the giant it was in the 80’s and 90’s. Kids won’t have the same attachment to Link and Luigi, since a good portion of their time is also spent with Master Chief and Nathan Drake. With everything from Minecraft to Call of Duty dominating the market, the goodwill will eventually run out.

Bobby here played Mario on his WiiU and Minecraft on his Xbox. The WiiU also gave him a few other family-friendly brands, but his Xbox also offered him Grand Theft Auto, Bioshock, and Halo…the games he’s heard about on the internet and played at his friend’s house. Nintendo won’t be the only brand he grows up with, and years from now, it won’t be able to play the nostalgia card because the key demographic won’t have that affectionate tie to the company. Sure, Mario was fun, but it wasn’t the formative experience of his childhood. Since the games are, for the most part, mutually exclusive, he’ll have to make a decision. And it won’t be Nintendo.

Of course, it wouldn’t be a tough decision if Nintendo would realize that…

2) They Need to License Their Games

Remember Sonic the Hedgehog? He had a string of fantastic games in the 90’s and developed a huge fanbase. He was exclusive to the Sega Genesis, a system attempting to compete with the Nintendo 64. Fast forward to 1999, and the Sega Dreamcast rolled around. Sonic was revamped and a series of new adventures were ready to be had.

Except the Dreamcast sucked. It was full of bugs and glitches, it was not as powerful as the other consoles in the generation, and couldn’t provide enough A-List titles. It looked like it was over for Sonic and friends. Sega saw the writing on the wall, and made the best move for the franchise…they gave the games to everyone else.

Sonic first popped up on the Gamecube and became a bestseller. So he then invaded the Xbox. Then the Playstation. Now he’s on Steam. The developers realized that the software was, and still is, more important than the hardware, and has since kept that franchise, and others, alive. Nintendo has yet to make this decision…and we know exactly why.

Is it because there’s no touch pad?

Nintendo wants their games to be family friendly. Kids, parents, grandparents…everyone can go bowling or collect coins. They want you to be able to turn on a WiiU and be confident that the game will have Mom’s Stamp of Approval. Now imagine Mario is on the Xbox. Same family-friendly game, but what happens if the last game in there was a bloody, zombie-slaughtering fiesta? What if you could log on to the internet and see soldiers cutting through foes with buzz saws? Surely Mom wouldn’t want that. Things need to be kept family friendly.

That’s actually a pretty insulting notion, if you think about it. Nintendo doesn’t want its brand on the same console as Witchers and Dark Souls, because they don’t think you’re smart enough to tell the difference between what’s child-friendly and what’s not. They have taken the notion of “being judged by the company you keep” to such an extreme that it’s actually hurting their company.

The beauty about the age we live in now is that games are not looked down upon as they were in the late 80’s and early 90’s. Parents no longer need to be convinced that video games aren’t melting their child’s brain, since most of those parents had some form of video games when they grew up. Nintendo is lucky that they live in an age where they can make a variety games for a variety of platforms, but for some reason, they are convinced that they need to play it safe and ignore the trends.

Overprotection over the intellectual property does not end at just the games, by the way.

3) Nintendo Won’t Let Their Characters Appear Anywhere Else

Ever wonder why all the Nintendo movies ever released suck? Or why you can’t find many Nintendo toys? It’s because Nintendo will not engage in business with a third party unless they can have a substantial part of the creative process.

The awful Super Mario Bros. film was so terrible because Nintendo played a heavy part in its development. This part was not played by a studio-branch of Nintendo who develops stories for the video games, by the way. No, the corporate officers, who determine corporate strategy, approved the script because a small-time newbie director and his inexperienced crew were the ones making the film, rather than an auteur director backed by a strong studio presence. If Universal or Paramount had pitched the film, Nintendo would have halted development. But a small production promised the executive officers control over the project, officers who, and I can’t stress this enough, had never made a damn film in their life.

Cinema at its finest.

The same goes for toys. Nintendo and a handful of select licensees have been able to churn out a few plush Pokémon and a Mario Keychain here or there, and so few Lego sets you can count them on your fingers. But the major toy manufacturers across the world have yet to be able to get their hands on intellectual property out of concern of losing control.

Concern, by the way, that is misplaced. Demanding product standards is not a new concept, and toy makers are more than happy to comply with licensors if the IP is strong enough (which it is, for the time being). Nintendo’s fear of brand dilution is one that, on the surface, makes sense, but completely falls apart when you look at the industry as a whole.

Ultimately, this is one that I REALLY can’t put my finger on, as George Lucas has proven that a licensed model for merchandising can be more profitable than the source material itself. Games drive toy sales, toy sales drive game sales, and on and on. Hasbro makes money, Nintendo gets a cut, and the kids are more inclined to play games. So long as everyone abides by the stipulations of the contract (which they would, by the way, because a multinational corporation would be insane not to), everyone wins.

But apparently, merchandise sales aren’t important to Nintendo. So for now, we are limited to whatever T-shirts and toys we can find at the Nintendo Store. Oh, and the Amiibo scarcity? Don’t even get us started on that. All you have to remember is that it all comes down to control. Which reminds us…

4) Nintendo vs. YouTube

We try to see things from Nintendo’s perspective. Seriously. But this is one instance where we cannot even play devil’s advocate. We will throw some heavy criticism towards Nintendo for this, but first: a parable.

There was a small team of aspiring game designers. They had a cool idea for a game and a serviceable amount of programming experience between them. But they didn’t have any studio backing, so they created their own studio for their own game. They published their game on the internet and charged a modest price. A few YouTubers found the game interesting, and began playing it. Fans of said YouTubers saw the game and bought it themselves. Many of them started channels of their own, other gamers joined in. It snowballed into one of the most dominating forces of internet gaming. The studio began releasing updates and special mods directly to said gamers, in order to have them spread the word. And spread they did, as the game grew to enormous proportions.

That game is called Minecraft, and it is the best-selling PC game of all time. With over 19 million copies sold, it became an online sensation, garnering a massive YouTube audience and a devoted fanbase of children and adults alike. Mojang, an independent studio, exploded into a massive force, eventually becoming part of Microsoft a few years later.

Lawsuit forthcoming.

Other developers have taken the hint…YouTube gaming = free promotion. That’s why Rockstar included a movie maker feature in Grand Theft Auto V. That’s why MMOs sponsor popular gamers to play their betas. In fact, that’s part of the reason early access games are a thing…people will play and promote.

Except for Nintendo. At first, they blocked these videos, because how dare people show themselves playing their video games. But then Nintendo realized that those videos make money, so they softened their stance, agreeing to allow people to show off their gaming skills for the small price of “all the money those videos make.” Gamers were angry…Nintendo already got their paycheck from the purchase of the game, now they need to cash in again on the efforts of other people who play, record, and edit videos? Several months ago, they softened their stance yet again, this time offering YouTubers around 35% of the gross revenue (after Nintendo and YouTube take their cut).

There was also a stipulation that this deal could be struck so long as the gamers agree to only play APPROVED Nintendo games on their channels, and feature no other games by any other developers anywhere else on their channel at all. Again…YouTubers were not happy.

PewDiePie, Jim Sterling, TotalBiscuit, and many other YouTubers publicly swore off Nintendo games because, again, Nintendo did nothing to make these videos, why should they get a portion of the money earned on these videos? They are already getting free advertising (which, by the way, is far more in-depth and effective than traditional methods of marketing), and those games were already purchased by YouTubers. You’d think that the stances taken by every other game studio would serve as a clear example of what a no-brainer this decision should be.

So why has Nintendo not gotten the memo? What needs to happen for Nintendo to make substantial change? Sales patterns make the trends in the industry clear, analysts and reviews define the tastes well, and if there is one thing the public is when it comes to opinions, it’s quiet. For any company with a solid executive team, it should be obvious. There should be no struggle in guiding the company to success, since the roadmaps are literally everywhere. So what’s the problem? What do we do?

At this point, we need to let the company fail. It’s like letting a six year fall on the playground. It won’t be pretty, but it’s the only way they’ll learn. We just need to hope the company has the wherewithal to get back up, dust itself off, and listen to those who know best.

Alex Russo likes to talk about video games. You can read more of his insane ramblings on Twitter.